Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
May Market Overview
Singapore market gapped up at the start of May to an almost 11-year high but went on a downhill straight after to end the month with a 5.1% decline, triggered by heightened geopolitical risks, political uncertainty in Europe, as well as higher US Treasury yields and technical weakness.
Banks and Keppel Corp gave up all and more of their outsized gains of the previous month, while the big winners were ComfortDelGro and Genting Singapore, following a turnaround in their business outlook.
Ytd, the STI logged a 0.7% gain (2.5% inclusive of dividends). But on an unweighted basis, the average return of STI constituents was -2.6%, with more than half posting losses.
While the Growth, Value, Yield (GVY) basket of stocks was not spared from the market sell-off, it managed to hold its own with an average ytd total return of 5.7% despite share price pullback in some of the high-flying stocks.
We also made several changes to the portfolio with the entry of four new counters, took profit on two others (Best World, Viva Industrial Trust) and exited an under-performing one (SIIC Environment).
Growth List +14.2% YTD
Average total return of the Growth portfolio was slightly dented by reduced investor risk appetite for semiconductor and healthcare counters.
However, the longer term fundamentals of these stocks remain largely intact and we are retaining them for stronger quarters ahead.
Exited Best World, which is our best performer since its entry in Dec 2015, after its disappointing 1Q18 results flagged concerns about its growth momentum in China and Taiwan, with an inventory overhang likely to spill over to 2Q18.
Meanwhile, we added HRnetGroup and APAC Realty on the back of strong earnings momentum and project pipeline respectively.
Value List -8.3% YTD
Performance of our property-centric Value portfolio continued to be underwhelming, as it lagged behind the upturn in the Singapore residential market.
Exited SIIC Environment at a loss as its dual-listing on the HKSE in Mar ’18 coincided with a period when sentiment was downbeat on Chinese water plays, and thereby failed to spark a re-rating. Further, its earnings growth has not translated to share price performance and the continuous operating cash drain is becoming a key concern.
We added Boustead Singapore given its improving business prospects in tandem with stronger order wins.
Yield List -0.9% YTD
The Yield portfolio was also weighed by the de-rating of UMS along with its industry peers, and competitive pressures facing APTT. But the Taiwan pay TV operator reaffirmed its 6.5¢ DPU guidance, offering a FY18 yield of over 15%.
Took profit on Viva Industrial Trust as the proposed merger with ESR REIT will dilute its exposure to high growth business parks. Moreover, it is uncertain if shareholders will agree to the merger terms, which will cap its share price below the $0.96 offer price.
We added Frasers L&I Trust for its sustainable DPU, backed by mostly freehold Australian assets and long lease terms with inbuilt step-ups.
Note: * Including dividends
** Priced in USD
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